Ordinals

Bitcoin NFTs? Bitcoin DeFi?

June 01, 2023

Prior to Ordinals, the Bitcoin blockchain had colored coins.

Both colored coins and Bitcoin ordinals utilize the Bitcoin blockchain as their underlying infrastructure. They leverage the ledger, security, decentralization, and consensus mechanisms provided by the Bitcoin network.

Bitcoin ordinals are a concept that assigns unique numbers to Satoshis to differentiate and track individual units of Satoshi similar to a serial number. Just like how in currency there are dollars and cents and cents are fractions of dollars, in Bitcoin Satoshis are a fraction of a Bitcoin with 100,000,000 Satoshis making up 1 Bitcoin.

Ordinal numbers enable the tracking of individual Satoshis unlike how colored coins focused on representing and tracking ownership of specific assets other than Bitcoin itself. The color in a colored coin represented the additional asset or value associated with a particular bitcoin output. Think of the difference between the concept of serial numbers (Ordinals) and links (Colored Coins).

On December 14, 2022 the first Ordinal was minted on the Bitcoin blockchain by Casey Rodarmor. Here’s a link to the first ordinal inscription on the blockchain: https://ordinals.com/inscription/6fb976ab49dcec017f1e201e84395983204ae1a7c2abf7ced0a85d692e442799i0

Bitcoin crypto wallets like Unisat when using a Taproot address support Ordinals. Unisat is both a crypto wallet and a web browser extension similar to MetaMask only Unisat holds Bitcoin and MetaMask doesn’t yet support holding Bitcoin or transacting on the Bitcoin blockchain.

Unlike Ethereum where both the additional data about a token, a NFT, or a protocol on the Ethereum network is in resonance with the Ethereum network, these Ordinals are written to individual Satoshis which can be sent on the Bitcoin network as a valid transaction but can be in violation of BRC-20 protocol.

From: https://www.coingecko.com/learn/brc-20-tokens#brc-20-tokens-vs-erc-20-tokens“Bitcoin will be unaffected if BRC-20 tokens or the protocol malfunctions. BRC-20 transactions can be accepted on the Bitcoin network and rejected on the BRC-20 protocol. For instance, if an ordinals wallet with 20 ORDI tries to make a transfer of 40 ORDI, this transaction will be accepted on the Bitcoin network (as it is seen as a normal transaction) but rejected on the BRC-20 protocol since the wallet doesn’t have enough ORDI balance. This is not the same for ERC-20 tokens, as the ERC-20 protocol is in resonance with the Ethereum network.”

Ordinals add JSON code to Satoshis which defines the characteristics of the BRC-20 token including the minting and distribution and the Bitcoin network decodes this information once the tokens are deployed.

To get started with a Unisat wallet and Ordinals, you can watch this YouTube video which explains Ordinals and shows step by step how to get a Unisat wallet and buy, create, and send Ordinals.

It is because of Ordinals that Bitcoin’s largest block ever with a size of 3.96 MB (Bitcoin block size limit is 4 MB) was mined on Febuary 1, 2023: https://ordinals.com/inscription/0301e0480b374b32851a9462db29dc19fe830a7f7d7a88b81612b9d42099c0aei0

The ORDI token of which there are 21,000,000 in circulation (in tribute to the max number of Bitcoin that can ever be created) itself is an ordinal and is traded on a variety of exchanges both centralized and decentralized: https://coinmarketcap.com/currencies/ordinals/#Markets

To search for other ordinal tokens, inscriptions, NFTs, there are marketplaces for Ordinals:

Here are a few ways you might create your own Ordinals using your Unisat wallet: